–The oldest war that cannot end. Sunday, Jul 27 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive,
and the motive is the gap.
======================================================================================================================================================================================

I’m sailing into dangerous waters, here, so please bear with me.

In religion, there are no facts; only stories. These are mine.

BACKGROUND

The earliest religions were multitheistic, with gods ruling over every conceivable thing — sun gods, moon gods, rain gods, ocean gods, mountain gods – an endless procession of gods, often at odds with one another.

Judaism was one of the first monotheisic religions, with 3,000 year old roots. Its one God has no physical presence, but rather is an all encompassing, eternal, all-knowing, omnipresent power.

Jews (originally “Children of Israel”) have a personal relationship with their god. All prayers are directed to, and all responses come from, this one god. There are no intermediaries.

Rabbis are not holy figures. They merely are teachers. No one prays to a rabbi.

This god gave the Jews their 10 commandments, the first three of which are:

1. I am the Lord thy God, who brought thee out of the land of Egypt . . .
2. Thou shalt have no other gods before Me. Thou shalt not make unto the a graven image, nor any manner of likeness, of anything that is in heaven above . . . (nor) bow down to them, nor serve them . . .
3. Thou shalt not take the name of the Lord thy God in vain . . .

Over time, people became uneasy with the concept of direct personal communication with God, perhaps believing they were unworthy of such communication, or perhaps needing a human presence to which to pray.

Jesus of Nazareth was a rabbi, born, lived and died a Jew, as were his disciples, including Peter, the first pope. Some Jews (Jewish Christians) accepted Jesus as their messiah, and so became the beginnings of Christianity.

Most Jews rejected the notion that Jesus is God or the son of God as a violation of the 2nd commandment, though this “problem” was addressed with the teaching of the Trinity and the revised commandments:

1. I am the Lord thy God. Thou shalt not have strange gods before me.
2. Thou shalt not take the name of the Lord thy God in vain.
3. Keep the Sabath day

In denying the legitimacy of Jesus as God, and in refusing to worship Jesus, Mary or any other saints, Jews essentially denied the legitimacy of Christianity.

Thus they were seen as a threat to Christian leaders, who ironically made Judaism, the religion of Christ, a target of Christian hatred, passed down from leaders to followers, through 2,000 years.

In the 7th century, common era, Islam was created by Muhammad, although Muslims believe that Adam, Noah, Abraham, Moses and Jesus all were Islamic prophets. Though Islam has its roots in Judaism and Christianity, Muslims and Christians repeatedly have warred, and both repeatedly persecuted the Jews.

As is common among religions, schisms occur among the less devout and the most orthodox. Christianity split into Orthodox and many Protestant denominations. Judaism is divided into Orthodox, Conservative and Reformed movements, while Islam divided into many schools, the primary of which are Sunni and Shia.

While early on, these divisions resulted in acrimony and even wars and murder in the name of God, the various divisions of Christianity and Judaism no longer engage in internecine combat.

Islam however, perhaps because it is younger, still is in civil war, particularly among Sunni, Shia and Wahhabi.

All of the above is to put into context, the current Mideast wars, especially those involving Hamas, a Sunni Muslim group, al Qaeda and the Taliban (radical Wahhabi Muslim movements), Hezbollah (a Shia Muslim group) and other Islamic groups often labeled as terrorist.

Ostensibly, the current Mideast war, involving Israel and Gaza, is a land dispute, with ownership claims dating back at least 3,000 years.

But, the amount of land involved including the disputed land (total about the size of the island of Sardinia), is minuscule (blue is Israel).

monetary sovereignty

Considering that the borders of almost every nation have been determined in wars, one wonders why, among all nations, the borders of, and even the existence of, Israel continues to be the subject of endless fighting.

I suggest that the current war between Israel and Gaza merely is a manifestation of ongoing religious wars between Christianity and Islam, and Islamic civil wars, that have gone on for the past 1500 years.

Religious wars are unlike political wars. While all wars are fought for political power, political wars have sub-motives: oil, water, forests, cattle or merely the increased military power that comes with increased population and extended borders. The purpose of political wars usually is to gain or protect some asset.

Religious wars are different. They always are passionate, and seldom are based on any real desire for asset gain. Instead, they are meant to rid the world of “infidels,” i.e. other religions.

When Israel gave Gaza to the Muslims, the act relied on the false Western narrative that Islam wanted land, freedom self-determination for its people. Based on that Judeo-Christian logic, the Israelis left in Gaza thousand of greenhouses, used to grow crops for internal consumption and export. Israel expected gratitude for doing what perhaps no other nation ever has done.

But the Muslims destroyed the greenhouses, which shocked the Israelis. It shouldn’t have, for the Gazan leadership wanted neither land, nor freedom no self-determination for its citizens. It wanted, and continues to want, the destruction of Israel and of Judaism, and later, the destruction of Christianity– all of whom are considered infidels.

(Right wing Christians understand this, which is why many are strong supporters of Israeli Jews, while ironically having been long time intolerants of American Jews. To Jews this is puzzling, though it makes perfect sense in the war between Christianity and Islam. “The enemy of my enemy is my friend.”)

The killing of Gazan civilians in the current hostilities, is widely decried, though civilian deaths are common in war. America and its allies killed 140,000 in Hiroshima and 80,000 in Nagasaki. Around 600,000 German civilians died during the allies’ wartime raids on Germany, including 76,000 German children. In July, 1943, during a single night in Hamburg, 45,000 people perished in a vast firestorm.

And these civilians were targeted, while Israel claims it tries to avoid civilians. But Hamas places its rocket launchers in or near hospitals, houses and schools, and urges its civilians to martyr themselves in front of bombs. That is a religious war, where martyrdom is welcomed as a weapon.

Another difference between political and religious wars is leadership. Political wars are led by agreed-upon leaders, who can evaluate real situations, and can, if necessary negotiate peace.

Religious wars are led by emissaries of God, who lead only a fraction of their religion, and who do not have the power nor the desire to negotiate peace, lest they be deposed by other, more radical religious leaders.

Hamas does not wish to negotiate peace with infidels. It wishes to destroy infidels. Nor does it have the power to speak for Islam, all of which considers Jews, Christians and opposing Islamic sects to be infidels.

When America, Russia and England defeated Germany, Italy and Japan, America instituted the Marshall plan that helped revive its former enemies. Today, short of a non-combatant “cold war,” we have reasonably peaceful relations with “the Axis.”

Despite massive killings on both sides, our people do not hate the people of these nations.

But, short of committing mass suicide, there never can be peace for Israel. There can be a cessation of active hostilities in a religious war, but there always will be hatred, that can boil over with the next perceived insult or the next vocal religious leader.

Those who criticize Israel for not giving Palestinians more land, or for killing civilians, are thinking with their logical, secular brains, but this is not a logical, secular battle. It is an illogical, religious fight between Christianity and Islam, with Israel being the point of Christianity’s spear.

In religion, there are no facts; only stories. These are mine.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)


10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Let’s play “Smart, Stupid or Liar?” Saturday, Jul 26 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive,
and the motive is the gap.
======================================================================================================================================================================================

Background: The U.S. governement, being Monetarily Sovereign, never can run short of its own sovereign currency, the dollar. Even if all federal taxes fell to $0, the federal government could continue spending as always.

In fact, deficit spending grows the economy (Federal deficit = economy surplus).

And this is unlike the situation with monetarily non-sovereign entities (states, counties, cities, businesses, individuals), which have no sovereign currency and can run short of dollars.

Given that, let’s play: Smart, Stupid or Liar?

Aon sees payoff from tax inversion

The commercial insurance brokerage now based in London shaved its tax rate to 17.5 percent in the second quarter. Its rate the last time it was a U.S. corporation in the same period: 24.7 percent.

Save 7.2% on taxes: Smart, Stupid or Liar?

The potential savings highlight the allure for North Chicago-based AbbVie to strike a nearly $55 billion deal to buy drugmaker Shire last week, a transaction that will allow it to cut its tax bill by shifting its legal address to the United Kingdom.

Smart, Stupid or Liar?

Administration officials estimate the deals, if allowed to continue, will cost the U.S. Treasury $17 billion in lost revenue over the next decade.

(Translation: Add $17 billion to the economy) Smart, Stupid or Liar?

President Barack Obama has asked Congress to pass a bill aimed at ending the practice. He asked for tax reform that lowers the corporate tax rate. But he says the problem can’t wait. He’s urging lawmakers to join the effort to close the loophole.

So, to prevent “costing” the U.S. Treasury billions, Obama wants to lower the corporate tax rates which will — “cost” the Treasury billions.

“If companies continue to change their domicile, we’re going to lose receipts, we’re going to lose jobs,” Rep. Ed Royce, R-Calif., said.

Royce says the changing the address (not the location) of a company’s headquarters (not its office or plants) costs the U.S. jobs.

Smart, Stupid or Liar?

The Council of Economic Advisors to the President (CEA) consists of 3 economists plus a professional staff of 15-25. The heads of the CEA, the Treasury Department and the Office of Management and Budget (OMB) form a group known as the Troika, which analyzes economic conditions and makes recommendations.

So all these economists advise the president on economic conditions, and apparently not one of them has told the President that:

1. Federal taxes do not finance federal spending
2. Federal deficit spending is necessary for economic growth
3. Federal taxes are recessionary in that they remove dollars from the economy
4. Taxes take income and profits from business, reducing business sales investment and employment.

Stupid, Smart or Liars?

Obama: Offshore ‘tax inversions’ are unpatriotic.

Obama says Americans don’t get to pick which rules they follow and neither should companies.

The President says being patriotic requires paying more taxes than the law specifies. He also says that if people move their investments offshore, they don’t receive tax breaks. (It would be rude to ask the President whether he pays more taxes than he needs to.)

Smart, Stupid or Liar?

Republicans in Congress,have supported broad tax reform that would eliminate loopholes and lower corporate tax rates in an effort to reduce the incentive for companies to relocate in countries with lower tax rates than the U.S.

The Tax Reform Act of 1986, with its basic structure of “broadening the tax base and lowering rates,” has become the lodestar for bipartisan tax reform. The Moment of Truth report by National Commission on Fiscal Responsibility and Reform Co-Chairs Erskine Bowles and Alan Simpson, the report of the Bipartisan Policy Center’s Debt Reduction Task Force led by Alice Rivlin and Pete Domenici, and the U.S. Senate “Gang of Six” budget blueprint have all proposed variations of the “broadening the tax base and lowering rates” reform framework.

Translation: “Broadening the tax base” means: Charge the poor and middle-incomes more. Lowering rates means: Charge the rich less. President Obama hired Bowles and Simpson, and their recommendations led to the sequester, which slowed economic recovery.

Smart, Stupid or Liars?

Bottom line: Both parties are bribed by the rich (via campaign contributions and promises of lucrative employment later). Economists are bribed via employment. So both parties are incented to do what the rich want, i.e widen the income / wealth / power gap between the rich and the rest.

There probably are some in Congress who are stupid enough to believe the Big Lie that the federal government needs tax dollars to “live within its means.” The President is not stupid, but he needs to opt for lower deficits, because deficit spending benefits the lower income groups, thus narrowing the gap.

So he raised FICA, cut Social Security benefits, hired Bowles/Simpson, tried to implement his “grand bargain,” which would have punished the less affluent, and said the government is like you and me in that it “needs to live within its means”.

President Obama: Smart, Stupid or Liar?

The most effective gap widening strategy would be to cut corporate taxes while “making up for the loss” by broadening the tax base. That is what I expect Congress and the President to do.

What should Congress do? The Ten Steps to Prosperity:

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

9. Federal ownership of all banks (Click here)


10. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Praying for your neighbor’s pain Friday, Jul 25 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive,
and the motive is the gap.
======================================================================================================================================================================================

As readers of this blog know, I believe the ACA (aka “Obamacare”) is a horrible law, as it is based on the “BIG LIE”:

– the lie that federal finances are the same as personal finances
– The lie that federal taxes pay for federal spending
– The lie that the Monetarily Sovereign U.S. government can run short of its own sovereign currency
– The lie that federal deficits inhibit economic growth and will cause hyperinflation

Rather than the convoluted Rube Goldberesque, inadequate ACA, that covers a few million additional people, while costing others more, Congress and the President should have voted to provide free, comprehensive Medicare for every man, woman and child in America (aka “single payer).

That said, ACA is a slight improvement over the previous system, in which millions of the poor had no health care insurance.

The right wing hates ACA, because:

– they want to defeat anything Obama and the Democrats have proposed
– the law benefits the poor and middle classes
– they didn’t think of it first (Oops, actually they did. It was called “Romneycare.”)

So in one of the nuttiest exhibitions of an increasingly nutty party, the Republicans in the House of Representatives voted 54 times (!) to defund ACA, all without any hope of success and without a viable alternative.

Surely, the right wing deserves a mention in the Guinness Book of Records — Insanity Section.

Today, continuing the madness, conservatives are giddy over the Halbig v. Burwell decision, which ruled that insurance subsidies could be provided only on state exchanges, not on federal exchanges. This would mean those states that did not create their own exchanges, but rather allowed the federal government to provide the exchanges, will not receive the subsidies.

The Surprise Obamacare Ruling That Wasn’t

Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology, is widely known as one of the architects of both Romneycare and Obamacare. His models of the economic effects of the bill were frequently cited by journalists and the administration.

(Last year), Gruber made the following observation:

“What’s important to remember politically about this is if you’re a state and you don’t set up an exchange, that means your citizens don’t get their tax credits — but your citizens still pay the taxes that support this bill.

“So you’re essentially saying [to] your citizens you’re going to pay all the taxes to help all the other states in the country. I hope that that’s a blatant enough political reality that states will get their act together and realize there are billions of dollars at stake here in setting up these exchanges.

“But, you know, once again the politics can get ugly around this.”

In short, Gruber felt it was highly unlikely that a state governor could be so cruel and stupid as intentionally to fail setting up an exchange. But, Gruber didn’t count on depravity of the red state governors, for in fact, many of them have done just that.

In the event this decision is allowed to stand, it merely will focus a spotlight on the crass politics of the ultra right-wing. It will demonstrate the moral and financial bankruptcy of conservative politicians, who deprive their own state and their own citizens of federal financing and of health care insurance, just to prevent Democrats from having a success.

If the conservatives “win,” millions of Americans will be go without affordable health care, and dozens of states will lose billions of dollars. That will be their pyrrhic “victory,” and no amount of flag-waving and quasi-religious bible thumping will erase the stain.

The Republicans remind me of Hamas, whose plan has been to have their own Gaza citizens starved, maimed and killed, so they somehow can “win” the war and maintain power. To conservatives, punishing their own people is worthwhile, if it helps defeat anything Obama.

Right-wingers should pray the decision is overturned (another court already has rendered a counter-decision), lest the entire nation, at long last, clearly see shameful conservatism in action.

All that remains for the right-wing is to nominate Michele Bachmann and Sarah Palin as Presidential running mates.

Perfect.

Rodger Malcolm Mitchell
Monetary Sovereignty

====================================================================================================================================================
Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

10. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

–Do we owe China too much if China owes us too much? Wednesday, Jul 23 2014 

Twitter: @rodgermitchell; Search #monetarysovereignty
Facebook: Rodger Malcolm Mitchell

Mitchell’s laws:
●The more federal budgets are cut and taxes increased, the weaker an economy becomes.
●Austerity is the government’s method for widening the gap between rich and poor,
which ultimately leads to civil disorder.
●Until the 99% understand the need for federal deficits, the upper 1% will rule.
To survive long term, a monetarily non-sovereign government must have a positive balance of payments.
●Those, who do not understand the differences between Monetary Sovereignty and monetary non-sovereignty, do not understand economics.
●The penalty for ignorance is slavery.
●Everything in economics devolves to motive,
and the motive is the gap.
======================================================================================================================================================================================

I enjoy reading a website called “The Daily Bell,” because it is entertaining — laugh-out-loud entertaining.

It is written by a man named Anthony Wile, “Chief Investment Advisor of High Alert Investment Management Ltd.” So far as I can tell, he seems to: Believe everyone should buy gold, love Ron Paul, love Peter Schiff, hate Keynes, hate “fiat” money and be ignorant of Monetary Sovereignty. And oh yes: Buy gold.

Recently, his site published an article titled, Another Chinese Economic Problem: Sky-High Debt Ratios:

China’s boom is to a large extent self-funded. The US can fund its enormous deficit because the dollar is the world’s reserve currency. Countries around the world hold dollars.

Wrong. Being the world’s reserve currency merely means that as a trade convenience, banks around the world hold dollars in reserve.

It has nothing to do with the federal government’s ability to “fund” its deficit, whatever that means.

The deficit is no burden, because our Monetarily Sovereign government has the unlimited ability to create dollars and to determine both the exchange value of the dollar and national inflation rates. That is what being “sovereign” entails.

Those Monetarily Sovereign nations (Canada, UK, Japan, Australia, China et al) whose currencies are not the world’s reserve, have the same powers.

China’s huge size and population and initial backwardness has allowed Chinese banking officials to treat China as a kind of miniature global system. The yuan may not be the world’s reserve currency but it’s China’s, and that’s been enough.

Wrong. Monetary Sovereignty, not size, are the keys to China’s ability to create its sovereign currency at will.

Then we come to the shockers:

The debt level] is up 20 percentage points of GDP since late 2013. The ratio has risen by 100 percentage points of GDP over the last five years. It has pushed debt to $26 trillion, more than the entire commercial banking systems of the US and Japan combined.

That should have been the clue. China is supporting a debt that is greater than “the entire commercial banking systems of the US and Japan combined.”

It sounds huge, but China seems to have had no problem supporting it. So, could the entire “debt-is-too-high” scenario simply be wrong?

The FT’s Jamil Anderlini points out here that the figure is very high for an emerging economy. Mature economies can handle a higher debt ratio for all kinds of reasons, not least because they have large assets to offset their liabilities.

Readers of this blog know that for a Monetarily Sovereign nation, the debt/GDP ratio is meaningless. Why? GDP does not pay for debt.

In the U.S., debt is the total of T-security deposits at the Federal Reserve Bank. To “pay off” this debt, the Fed transfers dollars from T-security accounts to holders’ checking account. No problem at all and no new dollars needed.

The federal government does not sell assets to pay its debts. Yellowstone Park and the Lincoln Memorial are safe.

Meanwhile, according to CNBC, China’s debt soars to 250% of GDP I sure hope China doesn’t have to sell the Yellow River.

This does not mean that China is about to crash. It has a state-controlled banking system. Therefore any bust scenario will play out in a different way, probably through much lower growth and two decades of Japanese-style extend and pretend …

We can inflate some of it away, or we can deflate into defaults and creditor haircuts. Pick your poison.

Forget the “bust scenario” whatever that imprecise term may mean. And forget about creditor haircuts, which are the famous province of the euro (monetarily NON-sovereign) nations.

Instead, think about “inflate some of it away.” This often misunderstood concept supposedly means: Inflation benefits debtors, because cheaper money can be used to pay debts.

Debts however, are not paid with purchasing value, but with face value. If China owes one trillion renminbi, it will have to pay one trillion renminbi, regardless of the purchasing power of those renminbi. Inflation has no effect on that.

But what if China owes one trillion dollars. It will have to exchange renminbi for dollars, and if the renminbi has lost value, China might have to spend more renminbi to buy the necessary dollars.

So what? China is Monetarily Sovereign. It can create unlimited renminbi to exchange for dollars, to pay its dollar debts.

Could this cause more inflation? Possibly. But remember, China has the same or even more, inflation-stopping tools at it disposal, as we do. China not only is sovereign over its sovereign currency, but as the author said, China has “a state-controlled banking system.”

The US in particular urged first the Japanese central bank and then the Chinese central bank to print additional currency that was used in one way or another to purchase US debt.

The currency was then redistributed in the US and recycled as consumer spending. The spending went back to first Japan and then China, thus fueling two “Asian miracles.”

Wrong, yet again. US debt cannot be purchased with foreign currency. To buy a T-bill, one must use dollars.

Further, dollars used to purchase T-securities are not “redistributed in the US.” That’s the “federal-taxes-pay-for-federal-spending” myth. Dollars in T-security accounts have but one place to go: To China’s checking accounts.

The only way American consumers can get their hands on those dollars is if China spends them here: i.e. China imports American goods and services. How has that been going?

In fact, it is U.S. dollar creation, not China’s borrowing, that funds American imports from China, the so-called “Asian miracles.”

This article provides us with further insights into the precipice on which China is now perched. We’ve usually commented on the eventual immanence of yuan price inflation; in fact, price inflation is already significant in Japan.

Only in the past year has Japan successfully and intentionally created inflation to fight its crippling deflation. Look at the trends:

monetary sovereignty
monetary sovereignty

The author would like you to believe that a large debt/gdp ratio (which has been the norm in Japan for many years) suddenly has caused the inflation Japan worked so hard to achieve.

The end result will no doubt be chaotic and ruinous. We will see then if those who have organized this deliberate, rolling insolvency shall have the wherewithal and credibility to create a kind of global Bretton Woods system that will reconfigure what is yet available.

And there it is: A gold standard will save us. Never mind that every time a nation has fallen into financial difficulties, it has dumped gold in an attempt to avoid a depression.

“The Daily Bell” is committed to selling gold to Anthony Wile’s clients.

And isn’t it ironic that for many years, debt hawks have decried the U.S. federal debt held by China. How often we have been told our debt to China is unsustainable and will break us.

Now suddenly, China’s debt to us has become unsustainable and will break China.

So we owe them too much and they owe us too much. Think about it. Does that make any sense, whatsoever?

Rodger Malcolm Mitchell
Monetary Sovereignty

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Ten Steps to Prosperity:
1. Eliminate FICA (Click here)
2. Federally funded Medicare — parts A, B & D plus long term nursing care — for everyone (Click here)
3. Provide an Economic Bonus to every man, woman and child in America, and/or every state a per capita Economic Bonus. (Click here) Or institute a reverse income tax.
4. Free education (including post-grad) for everyone. Click here
5. Salary for attending school (Click here)
6. Eliminate corporate taxes (Click here)
7. Increase the standard income tax deduction annually
8. Increase federal spending on the myriad initiatives that benefit America’s 99% (Click here)
9. Federal ownership of all banks (Click here)

10. Tax the very rich (.1%) more, with higher, progressive tax rates on all forms of income. (Click here)

—–

10 Steps to Economic Misery: (Click here:)
1. Maintain or increase the FICA tax..
2. Spread the myth Social Security, Medicare and the U.S. government are insolvent.
3. Cut federal employment in the military, post office, other federal agencies.
4. Broaden the income tax base so more lower income people will pay.
5. Cut financial assistance to the states.
6. Spread the myth federal taxes pay for federal spending.
7. Allow banks to trade for their own accounts; save them when their investments go sour.
8. Never prosecute any banker for criminal activity.
9. Nominate arch conservatives to the Supreme Court.
10. Reduce the federal deficit and debt

No nation can tax itself into prosperity, nor grow without money growth. Monetary Sovereignty: Cutting federal deficits to grow the economy is like applying leeches to cure anemia.
Two key equations in economics:
1. Federal Deficits – Net Imports = Net Private Savings
2. Gross Domestic Product = Federal Spending + Private Investment and Consumption – Net Imports

THE RECESSION CLOCK
Monetary Sovereignty

Monetary Sovereignty

Vertical gray bars mark recessions.

As the federal deficit growth lines drop, we approach recession, which will be cured only when the growth lines rise. Increasing federal deficit growth (aka “stimulus”) is necessary for long-term economic growth.

#MONETARYSOVEREIGNTY

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